One-glance verdict
Undervalued
$9.50 our estimate vs market $2.38
Wall Street consensus: $1.70 (-82.1% lower than our fair-value estimate)
75% below our estimate, below the bear case
Fundamentals snapshot
Montauk Renewables, Inc.
MNTK · NCM · Basic Materials · Specialty Chemicals
Current price
$2.38
52-week range
$1.07 - $2.73
Market cap
$338.67M
Balance sheet
Distressed
0.85x Concerning
Net debt $141.38M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 7.2% last year.
- Reward Returns 3.1% on equity, ahead of 50% of its peers.
- Reward Free cash flow was positive in 3/10 years.
- Risk Operating margin compressed from 24.0% to 1.1% over 3 years.
What this company does
Montauk Renewables, Inc.
Montauk Renewables captures methane gas from sources like landfills and converts it into cleaner energy, such as renewable natural gas. The company makes money by selling this energy and also by selling the resulting environmental credits (tradable certificates proving renewable fuel was made) to other companies that need to meet regulations. This matters because as environmental rules become more common, there may be more demand for Montauk's renewable energy and the credits it generates.
How the company got here
Founded in 1980, Montauk Renewables has over 30 years of experience working with a specific type of renewable energy. The company built its business by capturing methane gas, a potent greenhouse gas, from landfills and converting it into electricity. A key turning point was the company's strategic shift to focus more on producing Renewable Natural Gas (RNG), which has different economic and environmental benefits. In 2021, Montauk became a publicly traded company on the Nasdaq stock exchange, which allowed it to raise money to grow its RNG projects.
What it actually does
Montauk Renewables takes the gas that is naturally released from decomposing garbage in landfills and waste from large farms and turns it into energy. This gas, called biogas, is mostly methane. Instead of letting the methane escape into the atmosphere, Montauk captures it and cleans it to create a product that is chemically the same as the natural gas you might use for heating or cooking. This cleaned-up biogas can then be used as fuel for vehicles or to generate electricity for the power grid.
Renewable Natural Gas
This is the company's largest and most important business, making up the majority of its revenue. In this segment, Montauk captures biogas from landfills and other sources and processes it into Renewable Natural Gas (RNG). A big part of the value here comes from selling not just the gas itself, but also the associated environmental credits, known as Renewable Identification Numbers (RINs). These credits are valuable to companies like oil refiners who are required by government programs to blend renewable fuels into their products.
Renewable Electricity Generation
This is the smaller of the company's two segments. At some of its sites, instead of converting biogas to RNG, Montauk uses it to generate electricity directly. This electricity is then sold to the local power grid for homes and businesses to use. While this was a larger part of the company's history, the current focus is more on the RNG business, and the company is even converting some of its electricity facilities to produce RNG instead.
What management is betting on now
Management's strategy is heavily focused on expanding the production of Renewable Natural Gas (RNG). This includes building new facilities at landfills and developing projects to get biogas from agricultural sources like livestock farms. The company is also investing in optimizing its existing facilities to make them more efficient. A key part of their bet is on the value of environmental credits, so they are focused on projects that can generate these valuable assets and are even exploring new technologies to convert biogas into other high-value products like green methanol.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$16.02M
FY2024 Q4
$-8.27M
FY2025 Q1
$-2.49M
FY2025 Q2
$-25.46M
FY2025 Q3
$-17.16M
FY2025 Q4
$-41.10M
FY2026 Q1
$-15.02M
FY2026 Q2
$-10.09M
Revenue
$54.02M
Net income
$226.00K
Diluted EPS
0.00
Operating cash flow
$14.60M
Free cash flow
$-10.09M
Fetching…
Sources
Revenue
$46.43M
Net income
$5.00K
Diluted EPS
0.00
Operating cash flow
$15.85M
Free cash flow
$-15.02M
Fetching…
Sources
Revenue
$43.39M
Net income
$2.49M
Diluted EPS
0.01
Operating cash flow
$337.00K
Free cash flow
$-41.10M
Fetching…
Sources
Revenue
$45.26M
Net income
$5.21M
Diluted EPS
0.04
Operating cash flow
$12.65M
Free cash flow
$-17.16M
Fetching…
Sources
Revenue
$45.13M
Net income
$-5.49M
Diluted EPS
-0.04
Operating cash flow
$8.21M
Free cash flow
$-25.46M
Fetching…
Sources
Revenue
$42.60M
Net income
$-464.00K
Diluted EPS
0.00
Operating cash flow
$9.14M
Free cash flow
$-2.49M
Fetching…
Sources
Revenue
$27.69M
Net income
$-8.45M
Diluted EPS
-0.05
Operating cash flow
$724.00K
Free cash flow
$-8.27M
Fetching…
Sources
Revenue
$65.92M
Net income
$17.05M
Diluted EPS
0.12
Operating cash flow
$28.59M
Free cash flow
$16.02M
Fetching…
Sources
Is it cheap or expensive?
Fair value $9.50 vs current price $2.38
Wall Street consensus is the average analyst price target: $1.70 (-82.1% lower than our fair-value estimate).
Our most-likely fair value is $9.50 a share — about 299.2% above today's price of $2.38, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $141.4M. Interest coverage 0.8x.
Net debt
$141.38M
Interest coverage
0.85x
Montauk Renewables, Inc.'s profit covers its interest bill about 0.8 times over. which is stronger than most peers shown here and 4 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
MNTK
BASELINE
Montauk Renewables, Inc.
Total debt $157.14M Interest coverage 0.85x This is the baseline the peer rows are being compared against.
Total debt $431.69M Interest coverage 0.17x -79% vs MNTK Carries about 4.9x less debt cushion than MNTK.
Total debt $322.57M Interest coverage -1.81x -100% vs MNTK This peer has almost no interest-payment cushion compared with MNTK.
Total debt $170.70M Interest coverage -1.07x -100% vs MNTK This peer has almost no interest-payment cushion compared with MNTK.
Total debt $82.94M Interest coverage 1.41x +67% vs MNTK Carries about 1.7x more debt cushion than MNTK.
Total debt $324.00K Interest coverage -346.34x -100% vs MNTK This peer has almost no interest-payment cushion compared with MNTK.
What you should know
The case for and against MNTK
3 Rewards
1 Risk
Rewards
-
Revenue grew 7.2% last year.
-
Returns 3.1% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Operating margin compressed from 24.0% to 1.1% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
47.59x
Forward P/E
7.76x
P/B
1.29x
P/S
1.79x
EV/EBITDA
12.01x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
34.7%
Operating margin
1.1%
Net margin
4.2%
ROE
3.1%
ROA
0.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.59x
Current ratio
0.62x
Quick ratio
0.51x
Total debt
$157.14M
Total cash
$15.76M
Growth
How the business has been compounding
Revenue TTM
$189.10M
Revenue 5Y CAGR
4.5%
EPS TTM
0.05
EPS 5Y CAGR
-65.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$43.43M
Free CF TTM
$-86.21M
FCF margin
-45.6%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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